38

A few years ago I and a few friends created a company based on the web. During the raising funds period, we got a plan for $500,000 for 20% and we got investors. The last news about investors that I have refers to 2017: the investor got 15% for 180k (about 0.50 per share). Since that time I was out of the game and I had no news about the company. I now want to sell my shares so I asked them to sell my shares and their answer was:

We have you marked down as someone wanting to sell their shares.

What does it mean?

In the last 2 years, profit and loss balance is negative (-140K) but they expect some changes this year.

What do I need to calculate the share value?

Thanks for any suggestion.

  • 4
    This isn't enough information. Did you ask the company itself to help you sell shares? Is the company private or public? I'm guessing that you have equity in a private company and you are showing interest in selling the shares back to the company or maybe in some internal secondary market. – Brian R Mar 18 at 16:52
  • 3
    Sounds like a private or employee-owned company. Is this the case? – Patrick Tucci Mar 18 at 17:22
  • 18
    It means that at the moment, there is no one willing to buy your share of the company. – chepner Mar 18 at 17:44
  • 5
    The share price is whatever somebody is willing to pay. That is just as true for Apple and Amazon as for your private company. The share value is impossible to guess without a lot more information about the company, but don't forget that one way to decide which shares to trade is to compare the (estimated) value with the price and "buy cheap, sell dear". If there are no buyers and no prospect of any in future, your shareholding is effectively worthless. – alephzero Mar 18 at 21:25
  • 3
    So this is a privately held company with no liquidity events in two years, and noone has offered anything for your shares, no anticipated liquidity events either, and no planned path to profitability. Chances are your holding is worthless. What does this mean "we created a company ... Since [2017] I was out of the game and I had no news about the company." Are you a director, a preferred shareholder, or common shareholder? Companies are supposed to have revenues and customers and stuff, not just "investor phases" where you fleece new suckers while the insiders quietly dump their holding. – smci Mar 20 at 6:40
64

Private companies don't have liquid secondary markets. There are no identified buyers of your shares. The next time there's a fund raising round at the company they will include some or all of your shares in the transaction at whatever valuation is being used for the transaction.

What you need to calculate the value of the shares is a buyer for your shares.

  • 1
    @Uncoke You can also contact secondary markets such as EquityZen and SharesPost. Just be warned that they will generally not give you much help (beyond giving you their guess at the cap table) figuring out what price you should sell for and your buyer might have inside information. – David Schwartz Mar 18 at 23:22
  • hope it's not off-topic but is it allowed to sell shares of a private company to random people not associated with the company? – undefined Mar 19 at 9:47
  • 3
    @undefined In England and Wales, it depends on the articles of association of the company. In general (if the articles say nothing), the answer is "yes"; however it is quite common for private companies to have rules that mean sales require the approval of the board of directors (sometimes with the restriction "such approval is not to be withheld unreasonably") – Martin Bonner Mar 19 at 10:22
  • 2
    @undefined: That depends greatly on local law. Even the exact meaning of a "private company" varies between jurisdictions. – MSalters Mar 19 at 11:25
  • 1
    @undefined It is up to the company to decide on a policy. There are definitely companies that don't allow employees to transfer their shares or place limits how many they can sell. Generally, investors who hold preferred shares have more leeway. But it definitely varies, at least in the US. – David Schwartz Mar 19 at 21:01

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.